John Vardaman, Hypur's EVP and General Counsel and former DOJ lawyer, explains how cannabis banking provides visibility to the rapidly growing multibillion-dollar cannabis industry in this National Law Journal article.
Federal prosecutors should be "banging the drum the loudest" to get banks more involved in the nascent cannabis industry, providing visibility and transparency that would help expose any illicit activity, said a former U.S. Justice Department lawyer who'd helped draft guidance for financial crimes related to state legalization of marijuana.
The integration of marijuana businesses into the mainstream financial system would effectively deputize banks to help sniff out money laundering and other illegal activity within the industry, said John Vardaman, now the general counsel to Hypur, an Arizona-based electronic payments and banking compliance software company that helps financial institutions serve state-legal marijuana businesses.
At the state level, Vardaman said, increased access to banking services would help the marijuana industry pay taxes.
State-legal cannabis markets across the country are largely frozen out of the banking system, as financial institutions fear regulatory, compliance and enforcement hurdles tied to the federal government's classification of marijuana as an illegal drug. Hypur offers an electronic cannabis payment platform.
The U.S. Justice Department under Attorney General Jeff Sessions hasn't taken any overt steps to undermine state-legal markets, despite early rhetoric. Sessions in January revoked Obama-era guidance that had effectuated a hands-off approach to state-legalized cannabis businesses.
Sessions's withdrawal of the Cole memo—named after then-Deputy Attorney General James Cole, now a partner at Sidley Austin—deepened uncertainty that has hung over the nascent marijuana industry. The move raised the specter that marijuana companies would be criminally prosecuted and further meant banks would not rush to serve the nascent multibillion-dollar industry.
This article originally appeared on law.com.